In the last part of the article, you learnt how to develop a healthy debt repayment plan. We sorted out the list of the debts and found out the ones that we have to pay off first. We even tried to explore some ways to reduce those sky-high interest rates. You must have done a lot of calculations resulting in lots of cuts and crosses on your current list. So, it is now time to make a fresh list that should reflect all the changes. Let’s move on to the fourth step.
Step IV: Update Your List
If you are good at negotiation and you have really worked hard to explore the ways to get the rates reduced, you are likely to get a decent reduction in all the rates. Though lowering the mortgage rates may be a difficult task, but you can definitely do a lot of things to reduce the rates for other debts. In fact, even mortgage rates can be taken care of if you choose to consolidate the loan with a reputed debt consolidation company. Now, that the rates have changed, it is time to update your list and move on with your debt repayment plan.
Replace the old rates with the new ones. You may have to cross out some lines entirely if you have chosen to opt for balance transfer or debt settlement plans. In that case, you will have to merge those debts that you are consolidating and write the consolidated rate of interest for them. Once you rewrite everything, you again have to sort the list based on the decreasing order of the interest rates – the highest one at the top, followed by the second highest rate, and so on. This is your final debt repayment plan and you have to stick with it. The following steps will tell you how to use this plan for best results.
Step V: Make Minimum Payment For All The Debts, But Throw Everything To Pay Off The Top One
You have to work on to eliminate the debts from top, one by one. The best way to do this is to make maximum possible payments for the debt with the highest rate in the list while making minimum payments for the rest of the debts simultaneously. Try to make double or triple payment or even more if you can. Use snowflake strategy (check my Ezine article “Smart Spending – The Key To Achieve A Debt Free Life” for more details). Try to cut down your daily expenses as much as you can and save money. Use those few extra dollars that you save every month to pay off the top debt.
You will be glad to see your debts vanishing away fast. Don’t forget to cross out the debts. You will feel good about it and further motivated to use your debt repayment plan in the most prudent way. Visit my website to know more about debt management and how to pay off your debts.